Ambani's Reliance Retail Plans to Reduce Staff and Limit Growth

Mukesh Ambani and his daughter Isha Ambani are reportedly considering job and cost reductions as sales of Reliance Retail declines sharply. This includes reducing marketing expenditures, postponing the opening of new stores, combining Reliance Brands Ltd. with the bigger retail company, and reevaluating international brand alliances. Additionally, higher-paying staff will only be employed with the chairman's office's consent. According to a media agency, Reliance Retail is concerned about a slowdown in sales after brokers valued the company at only $50 billion, half of what it was worth when it raised capital two years ago.

Cutting Down on Expenses

According to the media agency's claim, which cited company documents, Reliance Retail reduced the number of new stores it opened and laid off 38,000 workers in 2024. The business also reduced marketing expenditures on its web platform called Ajio. Recruiting staff members making more than $22,890 a year now requires direct approval from Ambani's office as of October. Even hiring more employees than the authorised plan requires permission from V. Subramaniam, Managing Director of Reliance Retail. Previously, lower-level supervisors were in charge of making these choices. The report further states that these changes are an attempt to demonstrate to investors that the business is progressing, particularly in light of the fact that last year a number of brokerages, including Sanford C. Bernstein and Kotak Institutional Equities, reduced its valuation.

Decline in Sales in Retail Sector

Sales growth in organised retail categories like clothing, footwear, cosmetics, and QSR fell to a mid-single digit last year, down from 15% in 2022, according to the Retailers Association of India (RAI). The majority of merchants consequently shut down a number of unprofitable locations; this trend is anticipated to continue as businesses look to increase profitability. Businesses attribute the slowdown in spending to a number of causes, including high food inflation, low pay increases, consumer debt, a sluggish pace of job creation, and rising housing costs and rental prices. At the same time, prices continued to rise, particularly for real estate.Since these leases are long-term—seven to nine years—and corporations were hesitant to sign them, the market saw rental prices sort of soar following FY23 and the COVID boost.

As a result, most of the companies chose to slow down. Simply hitting a number and signing a document that will later come back to haunt the company is not a sensible course of action. Kaushal Parekh, chief financial officer at Metro Brands, elaborated on that point by saying that the market is currently witnessing a minor falling off in terms of rental expectations. Players are thus given the chance to press the paddle. Additionally, businesses have consistently stated that you may notice retailers moving a little more slowly when there is excessive market enthusiasm. Additionally, businesses will endeavour to promote the greatest rental deals when they observe the market getting a little more pessimistic and the environment improving.